National Prods. Co. v. Commissioner

*634OPINION.

The contentions made by the petitioner are divided into two groups: (1) that collection of any additional tax for 1917 is barred by the period of limitation within which such collection may be made, and all liability is extinguished under section 1106(a) of tbe Revenue Act of 1926; and (2) that the assessment of such additional tax for 1917, having been abated pursuant to the petitioner’s claim or request in writing and the period for further assessments having expired, tliere is no deficiency. The Commissioner contends that under the Revenue Act of 1924 he has six years from the date of assessment within which to collect the tax. The first contention of the petitioner is based upon two grounds: (a) that under tbe law the period for collection lias expired, and (b) that if the statute (Revenue Act of 1924) can be construed to allow a longer period for collection, there is a specific agreement between the petitioner and the respondent, authorized by the Revenue Act of 1921, by which the right to collect expired January 7, 1925.

The consent dated February 13, 1923, was by its express terms in effect only for one year after its date. No action was taken thereunder. Before it expired, a similar consent dated January 7, 1924, *635was executed by the parties. It is with the latter that we are principally concerned. This was executed by the parties pursuant to the terms of section 250(d) of the Revenue Act of 1921 which, so far as is here material, provides:

Tlie amount of income, excess-profits, or war-profits taxes due * * * under prior income, excess-profits, or war-profits tax Acts, * * * shall be determined and assessed within five years after the return was filed, unless both the Commissioner and the taxpayer consent in writing to a later determination, assessment, and collection of the tax; and no suit or proceeding for the collection of any such taxes * * * shall be begun, after the expiration of five years after the date when such return was filed * * *.

The assessment here involved was made under the provisions of such Act on March 22, 1924.

On June 2, 1924, the Revenue Act of 1924 became effective. This Act, so far as here material, provided:

Sec. 277. (a) * * * (2) The amount of income, excess-profits, and war-profits taxes imposed by * * * the Revenue Act of 1916, the Revenue Act of 1917, * * * shall be assessed within five years after the return was filed, and no proceeding in court for the collection of such taxes shall be begun after the expiration of such period.

Sec. 278. * * * (c) Where both the Commissioner and the taxpayer have consented in writing to the assessment of the tax after the time prescribed in section 277 for its assessment the tax may be assessed at any time prior to the expiration of the period agreed upon.

(d) Where the assessment of the tax is made within the period prescribed in section 277 or in this section, such tax may be collected by distraint or by a proceeding in court, begun within six years after the assessment of the tax. Nothing in this Act shall be construed as preventing the beginning, without assessment, of a proceeding in court for the collection of the tax at any time before the expiration of the period within which an assessment may be made.

(e) This section shall not (1) authorize the assessment of a tax or the collection thereof by distraint or by a proceeding in court if at the time of the enactment of this Act such assessment, distraint, or proceeding was barred by the period of limitation then in existence, or (2) affect any assessment made, or distraint or proceeding in court begun, before the enactment of this Act.

Sec. 283. This title shall take effect as of January 1, 1924.

Sec. 1100 (a) The following parts of the Revenue Act of 1921 are repealed, to take effect (except as otherwise provided in this Act) upon the enactment of this Act, subject to the limitations provided in subdivisions (b) and (c) :

Title II (called “Income Tax”) as of January 1, 1924;

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(b) The parts of the Revenue Act of 1921 which are repealed by this Act shall * * * remain in force * * * for the assessment and collection, to the extent provided in the Revenue Act of 1921, of all taxes imposed by prior income, war-profits or excess-profits tax acts * * *.

The decision of this case is controlled by that of the Supreme Court in Bowers v. New York & Albany Lighterage Co., 273 U. S. 346, and collection is barred unless the time for collection was extended by the Revenue Act of 1924.

*636While the 1924 Act provides that Title II, which includes section 278, shall take effect as of January 1, 1924, it is expressly provided in subdivision (e) of section 278 that such section shall not affect any assessment made before the enactment of the Act. The general provision of the Act must give way before this specific provision. The assessment having been made before the enactment of the 1924 Act, section 278(d), granting six years after assessment within which the tax may be collected, has no application. United States v. Whyel, 19 Fed. (2d) 260; United States v. Cabot, 5 Am. Fed. Tax Rep. 6172; Wilhelm Co. v. Heiner, 21 Fed. (2d) 463. The respondent must then look to the provisions of the Revenue Act of 1921, preserved as to assessment and collection of taxes under that Act and prior Acts, by the saving clause of the Revenue Act of 1924, quoted supra. The consent executed under that Act expired on Ja.nuary 7, 1925. Thereafter the collection of any deficiency was barred. The deficiency notice was mailed to the petitioner on July 1, 1925, some six months later and no proceeding to collect had theretofore been taken. Under section 1106 of the Revenue Act of 1926 the statute of limitations not only bars the remedy but extinguishes the liability. There is no deficiency.

Reviewed by the Board.

Decision will be entered accordingly.